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Bill aims to prevent price gouging

ANNAPOLIS — Hotels, storage facilities, gas stations and supermarkets would only be allowed to raise prices by a certain percentage during and after a declared state of emergency under legislation passed by the House of Delegates on Monday.

House Bill 332, meant to prevent price gouging during and immediately after severe weather events, passed 94-43 despite the repeated failure of similar bills for the better part of the last decade.

The bill, sponsored by Del. Joseline A. Pena-Melnyk, a Democrat who represents parts of Prince George’s and Anne Arundel counties, states that businesses providing so-called “essential services” could not increase their prices by more than 20 percent in comparison to the highest price they charged in a 60-day window that would begin four days before the state of emergency is declared.

The cap would remain in place for the duration of the declaration and 90 days afterward. The bill was amended by the House Economic Matters Committee to increase the cap from 15 percent to 20 percent after state fiscal analysts predicted small businesses would struggle to recoup costs, which can fluctuate by greater than 15 percent in a 60-day span.

Businesses would be allowed to increase prices by more than 20 percent if they are able to show that supply or labor costs increased by a greater percentage. Violation of the cap would be considered an unfair or deceptive trade practice under the Maryland Consumer Protection Act and expose the business to civil penalties.

Gov. Martin O’Malley made two emergency declarations last year — one for the sudden and violent derecho storm in June that struck Prince George’s County especially hard and a second for Hurricane Sandy in October.

“We’ve got some people trying to take advantage of that situation and trying to make a buck,” said Del. Dereck E. Davis, a Prince George’s County Democrat and chairman of the Economic Matters Committee. “There should be certain ethics and certain standards. When we are in a state of emergency … that should not be an opportunity for us to take advantage of.”

Washington, D.C., and Virginia already have similar laws to prevent price gouging. The Senate passed a similar bill in 2006, but — as in other years — the legislation did not make it out of the Economic Matters Committee.

Republican delegates said there was good reason for that. House Minority Leader Anthony J. O’Donnell, R-Calvert and St. Mary’s, said businesses would struggle under the cap and that it was too difficult for business owners to prove to the state they were merely raising prices to keep up with costs.

“You’re going to have to go into court to prove it, every time,” O’Donnell said. “You can’t just send a letter, make a call and say, ‘Hey, I’m honest.’ You’re going to be drug into court … this is not a minor thing.”

Companion legislation — Senate Bill 185, sponsored by Baltimore Democratic Sen. Catherine E. Pugh — had stalled in the Senate Finance Committee.

But with a deadline looming to send legislation to the legislature’s opposite chamber, the House Economic Matters Committee voted 13-9 late last week to bring the legislation before the full House. House passage on Monday ensures the Senate panel will have to reconsider the plan, with just two weeks remaining in the legislature’s 90-day session.